Eli5 How is it cheaper for a factory/company to hire contractors for basic work when there employees they hire are paid less per hr?

Question

I work for a contractor and I’ve always wondered why they hire us when I get paid $30 a hr and obviously my boss is making a cut on top of that. But the company I’m painting for only pays there employees $18 per hr? Wouldn’t it be easier just to hire an extra employee to preform simple tasks like painting, shoveling stone, ect these are all none skilled labor jobs.

In: Economics

Answer 1

I see a few explanations here for how it’s cheaper than it seems, but additionally, sometimes a company is willing to pay extra both for the flexibility of being able to fire you without having to announce that they are laying people off, and also because of accounting technicalities at publicly traded companies where a contractor comes from a part of expenses that investors are more comfortable with.